Home Business Telecommunications Optus does it tough for full year with revenue, profits down

Optus does it tough for full year with revenue, profits down

Full-year earnings are down and fourth quarter mobile service revenue declined 3% for Optus, despite what the telco says was its strongest quarter of mobile handset growth in five years.

Optus has grown operating revenues by 1.6% to $2.11 billion for the fourth quarter on the back of higher NBN revenues and equipment sales – but the quarterly result rounds out a difficult year, and pressure on earnings, for the telco.

Full-year earnings dropped 4% to $2.67 billion due to what Optus says was lower contributions from its enterprise business, and full-year operating revenue declined by 8% to $8.43 billion, affected by what the telco says was the mandated reduction in mobile termination rates from 3.6 cents per minute to 1.7 cents per minute for calls, and 7.5 cents to 0.03 cents for SMS.

But, a strong quarter of mobile handset growth saw the telco gain 78,000 postpaid and 64,000 prepaid services, which Optus says brings its total mobile base to 9.72 million customers.

Allen Lew, Optus chief executive, says that despite the heightened competition in the Australian market, the telco’s strategy of delivering customer growth through music, TV and sports content, “underpinned by a robust and resilient mobile network, is on track”.

“Throughout the year, Optus continued to enhance the competitiveness of its network – with $1.5 billion in capital expenditure,” Lew says.

“At the end of March, Optus’ 4G network reached 96.1% of Australians. Through the deployment of significant spectrum holdings and innovative technologies such as 4.5G and native Voice over WiFi, Optus is improving network coverage and download speeds for its data-hungry customers.”

Optus says full-year net profit was stable at S$3.85 billion while operating revenue dipped 2% to S$16.71 billion – down 3% in constant currency terms.

The telco’s March quarter results also revealed an increase in quarterly EBITDA of 0.3% year-on-year to $741 million and net profit was up 1% to $250 million.

Optus says mobile customer growth momentum continued with the leveraging of its mobile entertainment plans during the quarter, together with “extensive investments” in 4G services.

According to the telco, demand for 4G services continued to grow with 256,000 new sign-ups in the quarter and it now claims total 4G mobile subscribers of 5.8 million, accounting for 60% of its mobile base.

Optus also reported mass market fixed operating revenues grew 19% for the quarter, driven by a combination of “strong customer growth and NBN migration payments”.

At the end of the quarter, Optus says it had 228,000 NBN broadband customers, and a total of 1.15 million broadband customers, up by 7% on last year.


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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).